Image used for representative purpose. File
| Photo Credit: MURALI KUMAR K

Resolving long-pending tax dispute, Finance Minister Nirmala Sitharaman on Thursday, proposed withdrawing all outstanding direct tax demands upto ₹25,000 from 1962 to 2009-10. In her interim budget speech, she noted that a large number of petty or disputed direct tax demands were burdening the system, dating as far as 1962. This would help 1 crore taxpayers, said Ms. Sitharaman.

Read : Budget 2024 live updates | Interim budget leaves tax structure untouched; FM details Centre’s achievements

“To improve taxpayer services, there are a large number of petty or disputed direct tax demands, many of them dating as far back as 1962, which cause anxiety to taxpayers. I propose to withdraw such outstanding direct tax demands upto ₹25,000 pertaining to years upto 2009-10 and Rs. 10,000 for the period from 2010 to 2015. This will help 1 crore taxpayers,” the Finance Minister said.

She also highlighted the government’s move to introduce Faceless Assessment and Appeal, thereby imparting greater efficiency, transparency and accountability and that by introducing a new form 26AS to file income tax returns the process has been made “simpler and easier”. Currently, the average time taken for processing of returns stands reduced from 93 days to 10 days from 2013-14, Ms. Sitharaman said.

The Finance minister presented her sixth consecutive budget speech to Parliament on Day 2 of the Budget session. Her hour-long speech was for an interim budget for the FY 2024-25 as a ‘stop gap’ measure for the transition period between April and June/July. After the Lok Sabha elections scheduled to be held in April-May, the new government will present a full-fledged budget. The roadmap for a ‘Vikasit Bharat’ (developed India) will be unveiled in the next budget speech.

In September last year, the income tax department asked taxpayers to respond to its intimation regarding outstanding demands for 2022-23 to clear refunds faster. In 2022-23, as many as 7.09 crore income tax returns (ITRs) were filed of which 6.96 crore ITRs were verified and 6.46 crore processed. The I.T department said that the notices for unsettled tax demands were issued to provide taxpayers relief in line with “principles of natural justice”.

With the withdrawal of historical tax demands, the hassles faced by both the I.T department and citizens will be greatly reduced.

Tax payers file their income-tax returns. As many as 7.41 crore I-T returns have been filed so far this year, which include 53 lakh first-time tax filers. File
| Photo Credit: The Hindu

India’s tax base has widened sharply since 2013-14, with individuals moving up the income ladder and the proportion of super-rich taxpayers’ incomes declining, the Central Board of Direct Taxes (CBDT) said on Thursday, days after the Congress cited income tax data to show widening income inequality in the country.

The overall number of income tax (I-T) returns filed by individuals has risen from 3.36 crore to 6.37 crore through assessment years 2013-14 to 2021-22, while there is also an increase in number of returns filed by individual taxpayers across various ranges of gross total income, the CBDT said in a statement.

“In the range of gross total income up to ₹5 lakh, the number of returns filed by individual taxpayers has increased from 2.62 crore in AY 2013-14 to 3.47 crore in AY 2021-22, registering an increase of 32%. This range of income includes individuals having income below taxable limit who may not be filing returns,” the board pointed out.

Migration to higher range

For higher income ranges of ₹5 lakh to ₹10 lakh, and ₹10 lakh to ₹25 lakh, the number of individual returns filed surged 295% and 291% individuals over the same period, respectively. “This indicates that individual taxpayers are showing a positive trend of migration to higher range of gross total income,” the CBDT said.

Digging deeper into the data reveals that the proportionate contribution of gross total income of top 1% individual taxpayers vis-à-vis all individual taxpayers has decreased from 15.9% to 14.6%, the board said, while the share of the bottom 25% taxpayers increased from 8.3% to 8.4% over the same period.

“The proportion of gross total income of middle 74% group of individual taxpayers increased from 75.8% to 77% in the above period,” the statement said, adding that the average gross total income for individual taxpayers increased from about ₹4.5 lakh to about ₹7 lakh over the nine-year period, representing an increase of 56%.

“The increase in average gross total income for top 1% individual taxpayers is 42% while that for bottom 25% individual taxpayers is 58%,” it added.

The data indicates “robust growth in the gross total income of individuals across different income groups subsequent to AY 2013-14”, the board emphasised, adding this was reflected in the increase in net direct tax collections from ₹6.38 lakh crore in 2013-14 to ₹16.61 lakh crore in 2022-23.

As many as 7.41 crore I-T returns have been filed so far this year, which include 53 lakh first-time tax filers.

Over six crore taxpayers had filed their income tax returns (ITRs) by Sunday evening, a day before the filing deadline, which the Income Tax Department termed a “new milestone” as this is significantly higher than the total returns filed by July 31, 2022.

Nearly 26.8 lakh taxpayers filed their tax returns by 6:30 p.m. on July 30, while more than 1.3 crore “successful logins” were recorded on the e-filing portal of the IT department. Similar logins on July 29 stood at 1.78 crore.

“We extend our gratitude to taxpayers and tax professionals for helping us reach this milestone, and urge all those who haven’t filed ITR for AY 2023-24, to file their ITR at the earliest to avoid last-minute rush,” the department said, signalling that there might not be an extension to the July 31 deadline, though there have been pleas to do so in the wake of the strife in Manipur and the floods in parts of the country.